2011 STRATEGY DAY 12 December 2011 Agenda TIME PRESENTATION - - PowerPoint PPT Presentation

QANTAS AIRWAYS LIMITED 2011 STRATEGY DAY

12 December 2011

Agenda

TIME PRESENTATION SPEAKER

8.30am CEO Address Alan Joyce 8:45am Integrated Group Strategy Jayne Hrdlicka 8:55am Leading Domestic Business Jayne Hrdlicka 9:05am Qantas Domestic Rob Gurney 9:20am Qantas Frequent Flyer Simon Hickey 9:35am Jetstar Domestic Bruce Buchanan 9:50am Freight Rob Gurney 10:00am Domestic Q&A Alan Joyce and Management Team 10:30am BREAK: MORNING TEA 10:50am CEO Welcome Back Alan Joyce 10:55am Transforming Qantas International Lyell Strambi 11:25am Jetstar: Growing in Asia Bruce Buchanan 11:45am International Q&A Alan Joyce and Management Team 12:15pm Group Fleet and Funding Strategy Gareth Evans 12:35pm Summary and Group Q&A Alan Joyce and Management Team 1:00pm SESSION ENDS: LUNCH

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CEO Address

Alan Joyce Chief Executive Officer

4

Deliver sustainable returns to shareholders

To be one of Australia’s great businesses and among the world’s great Airline Groups

Qantas Group Vision

• Safety, always our first priority
• Loyal customers passionate

about our brands

• Passionate people delivering

exceptional experiences to

• ur customers
• Multiple brands delivering the right

experiences to the right mix of customers, cost competitively

• The best loyalty program in

the world, driving even deeper levels of customer engagement across all brands

• Unrivalled strength in corporate

sales and distribution

• Innovative leverage of partners
• Disciplined approach to capital

management

This will be made possible by the combination of:

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Depth of experience to lead change

Qantas, Jetstar, Ansett, Aer Lingus

Alan Joyce

Chief Executive Officer

Qantas, Caltex, KPMG

Gareth Evans

Chief Financial Officer

Jetstar, Boston Consulting Group

Bruce Buchanan

Group Chief Executive Officer, Jetstar

Qantas, Ansett, Air New Zealand

Lesley Grant

Group Executive

Qantas, British Airways

Rob Gurney

Group Executive Qantas Airlines Commercial

Qantas Frequent Flyer, Qantas, Bovis Lend Lease, Arthur Andersen

Simon Hickey

Chief Executive Officer Qantas Frequent Flyer

Qantas, Bain and Company, GM roles in consumer products

Jayne Hrdlicka

Group Executive Strategy and Technology

Qantas, Memtec

Brett Johnson

General Counsel

Qantas, Coca-Cola Amatil, Andersen Consulting, Westpac

Jon Scriven

Group Executive People and Corporate Services

Qantas, Virgin Atlantic, Ansett

Lyell Strambi

Group Executive Qantas Airline Operations

Qantas, Transport and Tourism Forum, Tourism Australia

Olivia Wirth

Group Executive Government and Corporate Affairs 6

Focusing on our key stakeholders has never been more important

SHAREHOLDERS

• Sustainable and attractive returns
• Profitable growth
• Prudent capital allocation
• Sustainability and risk management
• Superior engagement
• “Leading leaders”
• Culture of recognition
• Diversity
• World leading product offering
• Optimal networks
• Customer service excellence
• Innovation

EMPLOYEES CUSTOMERS

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• Low cost carrier focused on price sensitive leisure travellers
• Extensive domestic leisure network
• Focused on international traffic to/from Australia with Pan-

Asian expansion

• Australia’s leading coalition loyalty program, with more than 8

million members and more than 500 partners

• Innovating and expanding along the loyalty value chain
• Markets freight capacity across the Group’s passenger fleet

and dedicated freighter operations

• Manages strategic logistics assets

Qantas Group at a glance

• Premium full-service airline targeting business and premium

leisure travellers

• Unrivalled domestic network
• Service key international markets UK, US and Asia

8

Integrated Group Strategy

Jayne Hrdlicka Group Executive Strategy and Technology

9

A number of underlying themes will influence performance and outlook and will shape our future

MACRO- ECONOMIC

• Different regions growing at

different rates

• Sustained high oil prices
• Economic uncertainty
• Strong Australian dollar

COMPETITION

INTERNATIONAL

• Government-backed

competitors

• Battle of the hubs –

Middle East, China & SEA

• Rise of LCCs

DOMESTIC

• Maturing market, competitive

rivalry, rational capacity deployment

• Regional growth –

resource sector

INDUSTRY CONSOLIDATION • Cross border and

inter-regional

REGULATORY

• ASEAN open skies
• n the horizon
• Increasingly liberal

bilateral agreements

10

2010-2030 TRAFFIC Asia Pacific Europe Middle East North America Latin America CIS Africa 1,000 2,000 3,000 4,000 5,000 2010 TRAFFIC

Asia Pacific to lead in world traffic by 2030

Source: Airbus

28% 27% 27% 7% 5% 3% 3%

% of 2010 world RPK 20-year growth % of 2030 world RPK

WORLD TRAFFIC BY AIRLINE DOMICILE (RPK BILLIONS)

5.7% 4.0% 3.3% 7.4% 6.1% 4.9% 5.6% 33% 23% 20% 11% 6% 4% 3%

20-year world annual traffic growth

4.8%

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Positioned within the high growth region, focused on reshaping our portfolio to capture the growth

10-YEAR AVERAGE ANNUAL RPK GROWTH FROM/TO/WITHIN THE PACIFIC REGION (2010 – 2020)

MIDDLE EAST 8.3% AFRICA 6.0% INDIAN SUB

5.6%

PRC 6.2% ASIA

5.7%

JAPAN 4.0% NORTH AMERICA 5.0% LATIN AMERICA 8.3% DOMESTIC & INTRAREGIONAL 5.0%

Source: Airbus

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Building on our strong domestic business:

DELIVER SUSTAINABLE RETURNS TO SHAREHOLDERS

• 1. Qantas Frequent Flyer Program

Qantas Group Strategy

Growing Jetstar in Asia

Building customer loyalty through great experiences and multiple brands

Transforming Qantas International Deepening FFP1 member and partner engagement Profitably building

• n 65% market

share through dual brands Growing

• ur portfolio
• f related

businesses

Engaging and developing our people

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Safety is always our first priority

Valuable group of integrated businesses

VALUE INHERENT IN THE GROUP

VALUE

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Diversification Scale benefits Flexibility Synergies

Safety is always our first priority and is at the heart of everything we do

World leading integrated management system Proactive engagement with regulatory and industry bodies Group-wide Business Resilience framework and culture Safety priority and capability proven

15

Qantas Group strategy rests on the strength

• f our brands,

to deliver sustainable returns to shareholders the loyalty of our customers and the passion of our people…

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The evolution of

• ur great brands

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The commitment to our customers

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Stabilised industrial relations environment

• Recent industrial dispute to be settled by industrial umpire (Fair Work Australia)

– Three unions involved – ALAEA1, AIPA2 and TWU3 – Represents 18% of workforce

• Qantas has a total of 48 collective agreements with employees which involves

14 unions

• We have successfully negotiated 5 Enterprise Agreements with more than

10,000 employees (more than 33% of workforce) represented by 4 unions in the past 15 months, including:

– ASU4 – NUW5 – Short Haul FAAA6

• EBA’s covering less than 6% of the workforce are due for negotiation over the

next 12 months

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• 1. Australia Licenced Engineers Union; 2. Australian and International Pilots Union; 3. Transport Workers Union 4. Australian Services Union ; 5. National Union of Workers;
• 6. Flight Attendants Association of Australia

QANTAS CUSTOMERS CAN BOOK WITH ABSOLUTE CONFIDENCE AND CERTAINTY

Staff engagement: Where we stand today

• 1. Towers Watson Engagement Measure

Qantas Group engagement1 score 2011 Average score for Australian

• rganisations

70% 82%

Improving engagement is a key focus at all levels

• f management

Lower scores in some areas e.g. pilots & engineers

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Build on the inherent passion

• ur people have for our brand

We are engaging our people…

• Building

strong leaders

• Delegating

engagement initiatives

• Involving
• ur people

in problem solving

• Setting clear

targets and metrics for line managers to implement engagement plans

21

Qantas Group: Progress against strategic objectives to date

Grow “asset-light” businesses which deliver attractive returns Maintain profit-maximising 65% position Capitalise on attractive growth

• pportunities

Grow and enhance Qantas Frequent Flyer

PILLARS OBJECTIVES PROGRESS

Return business to profitability

ACHIEVEMENTS

Growing Jetstar in Asia Transforming Qantas International Profitably building

• n 65% market

share through dual brands Deepening FFP3 member and partner engagement Growing our portfolio of related businesses

• Progressed Freight JV restructure
• Launched “Epicure by Qantas Frequent Flyer”
• Acquired Wishlist
• Merged Jetset Travelworld/Stella
• Retained 65% market share
• No.1 and 2 most profitable domestic airlines in FY11
• Increased number of Corporate accounts
• Regional growth and acquisition of Network Aviation
• Market leading OTP1 and NPS2
• Jetstar largest LCC in Asia Pacific8
• Jetstar Japan to launch in 2012
• Jetstar Asia established A330 base in Singapore
• Reached 8m member target4
• Partner base extended to 500+ partners
• Significantly enhanced loyalty program benefits
• Industrial relations environment stabilised
• Reduced capex - deferred 6 x A380s to FY19 and beyond
• Granted full ATI5 clearance for JBA6 with AA
• Restructured and strengthened JSA7 with BA
• Sponsorship of Malaysia Airlines into oneworld
• 1. On Time Performance 2. Net Promoter Score 3. Qantas Frequent Flyer Program 4. As at August 2011 5. Anti-Trust Immunity 6. Joint Business Agreement 7. Joint

Service Agreement 8. Based on Gross Revenues

Building on our strong domestic business

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Building on our strong domestic business

Qantas Group: 5 Year Measures of Success

• Add incremental value to the Group
• Individual businesses achieve ROIC > WACC
• Minimal capital requirements
• Maintain profit-maximising 65% market share
• NPS: QA - relative NPS differential > 10%;

JQ leading LCC NPS

• QA: 90% OTP2
• Improvement in unit cost
• Top 2 LCC in Asia Pacific Region (by revenue)
• Lowest CASK for each Jetstar branded airline
• All new ventures profitable within 3 years
• 10 million QFF members
• Partners in all areas of major consumer spend
• 5-10% EBIT CAGR FY12-FY17
• Maintain breakage below 10%

PILLARS METRICS CURRENT RETURNS

• Short term: return business to profit
• Relative NPS differential > 10%
• 85% OTP
• Improvement in unit cost

TARGET RETURNS

Growing Jetstar in Asia Transforming Qantas International Profitably building

• n 65% market

share through dual brands Deepening FFP member and partner engagement Growing our portfolio of related businesses Continue to strongly exceed cost of capital1

• World leading safety culture
• 80+% of total workforce “engaged”

ROIC > WACC ROIC > WACC ROIC > WACC ROIC < WACC ROIC ~ WACC ROIC > WACC

Continue to exceed cost of capital and grow returns Continue to exceed cost

• f capital

Improve return

• n capital1

Improve return

• n capital

ROIC > WACC ROIC > WACC ROIC ~ WACC ROIC > WACC

Deliver sustainable and attractive returns to shareholders

• 1. Long term financial objective for Qantas

Airlines segment is to sustainably exceed the cost

• f capital on a combined basis

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• 2. On Time Performance

Leading Domestic Business

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Qantas Group holds a strong position in the maturing domestic market

MARKET DYNAMICS COMPETITION FOR MARKET SHARE INTRODUCTION OF LCCS MATURING MARKET STEADY STATE DUOPOLY Profit Maximising Market Share %

3.0% 3.6% 3.0% ~3.0% 4.5% 7.0% 8.0% ~4.0% 1981-1990 1991-2000 2001-2010 2011-2020

• 1. 10 year CAGR 2. 10 year CAGR ASK

Source: BITRE, Internal Estimates

DECADE OUR HISTORY COMPETITOR HISTORY GROUP MARKET SHARE

50% 50% 65% 65%

GDP1 Market Capacity2

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Group Domestic: 5 Year Vision and Strategy THE CLEAR CHOICE FOR TRAVEL, LOYALTY AND RELATED SERVICES

Passionate teams, highly engaged Safety is always our first priority Attractive related businesses, leveraging market strength Profit maximising 65% market share Operational excellence and innovation Customer experience and engagement leadership Strong multi-brand model

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…with each segment’s contribution varying across market dimensions… …with each segment’s contribution varying across market dimensions… There are three distinct behavioural segments…

Domestic travellers have very different needs and values; understanding this market is more important than ever

…which drives the foundation of our Multi-brand strategy

4 2 1 6 5 3

Leisure A Leisure B Leisure C Business A Business B Business C

Revenue PAX Customers C B A

There are three distinct behavioural segments…

• Ave. Rev/PAX

(Rank)

Source: Qantas whole-of-market flyer survey – August 2009

27

BUSINESS MAKE IT EASY BUSINESS PRICE DRIVEN

PRICE SENSITIVITY

Our multi-brand model is designed to give customers the experience they desire…

HIGH LOW

TRAVEL PURPOSE

BUSINESS LEISURE

BUSINESS COMFORT SEEKERS LEISURE MAKE IT EASY LEISURE PRICE DRIVEN LEISURE COMFORT SEEKERS 28

Powerful domestic brand franchise underpins Group’s success

The clear choice for business and premium leisure travellers Building the world’s best loyalty business The clear choice for price sensitive travellers …With each brand playing a very specific role

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Operational excellence and innovation while reducing the cost differential

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UNIT COST

COMPETITOR

Differential

QANTAS

ROUTES (ACTUAL SAMPLE)

Why 65% for our flying market share? It drives maximum value for shareholders…

Benefits are driven by distribution, scale, network and relative frequency leading to maximum profitability for the Group

Revenue share

High capacity share = superior revenue share 65% is the optimum position on the ‘S’ curve

20 40 60 80 100 10 20 30 40 50 60 70 80 90 100 Capacity share (% ASKs) 65 Competitor 2 Competitor 1 JQ when no QF on route QFG Qantas Group 31

…and we are committed to maintaining 65% market share in the future

Source: Historical total market data has been taken from BITRE. FY12 onwards are based on internal estimates and assume that Qantas Group maintains 65% market share.

ASKs (Billions) Qantas Group Market Share (%)

65%

0% 10% 20% 30% 40% 50% 60% 70% 20 40 60 80 100 120 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17

Qantas Domestic Jetstar Domestic Other QA Group Market Share (%)

Premium Market Forecast Growth ~ GDP Leisure Market Forecast Growth > GDP

32

Qantas Domestic (LHS) Jetstar Domestic (LHS) Other (LHS) QAN Group Market Share (%) (RHS)

Qantas Domestic

Rob Gurney Group Executive Qantas Airlines Commercial

33

LARGEST DOMESTIC NETWORK

QANTAS MAINLINE

• Largest domestic airline

̶ Operating ~2,450 flights/week ̶ 17m passengers annually1 ̶ Fleet of 81 aircraft

QANTASLINK

• Largest regional airline

̶ Operating ~2,000 flights/week ̶ 5m passengers annually1 ̶ Fleet of 57 aircraft servicing 55 destinations

NETWORK AVIATION

• Operates FIFO charter services in WA for the mining

& resources industries

̶ Operates 6 Embraer Brasilia & 7 Fokker 100 aircraft

Qantas Domestic: Where are we today?

• 1. For the 12 months ended 30 June 2011

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Qantas Domestic: 5 Year Vision and Strategy

THE CLEAR CHOICE FOR BUSINESS AND PREMIUM LEISURE TRAVELLERS

Operational excellence and efficiency

Passionate teams, highly engaged Safety is always our first priority

Corporate and SME relationship strength Superior customer experience and engagement Iconic and contemporary brand Infrastructure strength to grow with our customers

35

KPIs: What does success look like?

PILLARS KEY MEASURES Superior customer experience and engagement

• Leading NPS
• Superior employee engagement

Leverage iconic and contemporary brand

• Leading Domestic brand equity score

Leverage Corporate and SME relationship strength

• Maintain and build Corporate and SME accounts

Infrastructure strength to grow with our customers

• Leading network frequency on key business routes
• Growth in regional markets

Operational excellence and efficiency

• Leading Domestic aircraft availability and OTP1
• Benchmark TRIFR2 and LWCFR3
• Lower unit cost

CONTINUE TO STRONGLY EXCEED COST OF CAPITAL (QANTAS AIRLINES4 SEGMENT TO SUSTAINABLY EXCEED COST OF CAPITAL IN LONG TERM)

• 1. On Time Performance 2. Total Recordable Injury Frequency Rate 3. Lost Work Case Frequency Rate
• 4. As defined in the 2011 Annual Report Note 2 (page 62), this segment represents Qantas passenger flying businesses and related businesses and excludes Jetstar, Qantas Freight and QFF.

36

We start with the world’s best domestic travel experience today…

• Recognition and rewards for our

most frequent flyers

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• Unsurpassed domestic experience

for business and premium leisure travellers

• Most advanced check-in technology
• Superior lounges

̶

Exclusive Chairman’s Lounge

• Premium dining and beverage offering

… and we aspire to deliver an excellent experience to all of our customers, all of the time

Consistent end to end look and feel Empowering

• ur people to

do a great job Pioneering technology innovation Engagement through multi-channels WE WILL CONTINUE TO LIFT THE BAR ACROSS THE BOARD …ON THE GROUND Consistently exceptional experience for high value customers

38

…and in the air Our vision for the domestic in-flight experience

• Continue to set the standard for premium cabin

experience

— Award winning service — Best dining experience in the air — Leadership in In Flight Entertainment

39

Our brand vision: “To be the world’s leading premium airline brand”

Significant underlying emotional support of our brand

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We will continue to evolve our brand throughout 2012 and beyond Customers want to see us succeed

• n the world stage

Our Corporate Dealing Model will continue to be a key competitive advantage BENEFITS FOR THE CUSTOMER

• Optimised savings and flexibility
• Broad ranging benefits across

domestic & international networks

• Maximum gateway and carrier
• ptions through key alliance

partnerships

• Enhanced traveller recognition

BENEFITS FOR THE AIRLINE

• Expenditure and share

commitments

• Greater certainty and stability in

commercial performance

• Qantas Frequent Flyer synergies

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The leading airline for regional Australia

• Largest regional fleet and network

with capacity growing at 9.1% CAGR1

• Profitable operations underpinned

by Q400 expansion

• Regional Qantas Club Lounge network
• Faster, Smarter Check-in rolled out to 16

regional destinations

1. ASKs over five years to FY11

42

We are uniquely positioned to grow with our customers…

• Resource sector is experiencing unprecedented levels of investment
• Projects committed or under construction are valued at $115bn1 in QLD and $186bn2 in WA
• Resource companies are seeking larger aircraft with national capability to meet labour

demand requirements

1. Queensland Resource Council July 2011 – Projects under study, committed or under construction 2. ‘Significant resource projects in WA’ Sep 2011, Department of Mines and Petroleum

43

…and well placed to capitalise on the resource boom

2.0 2.5 3.0 3.5 4.0 4.5 5.0

(billion ASKs)

40 45 50 55 60 65 70

Fleet Units

QantasLink Network Aviation ASK FY06 FY07 FY08 FY09 FY10 FY11 FY12 > 44

Operational excellence is critical to delivering our customer promise and a competitive cost position

• Setting the benchmark for On-Time Performance and operational reliability
• Market leading technology to deliver efficient rostering
• Motivate and enable our people to deliver operational excellence
• Drive our costs down to better align with the competition

70% 72% 74% 76% 78% 80% 82% 84% 86% 88% 90% 92% Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Qantas Virgin Blue

Impacted by industrial action

ON TIME PERFORMANCE QANTAS VS. VIRGIN AUSTRALIA

JANUARY 2009 – NOVEMBER 2011

45

Source: BITRE and Company Data

Finalising B738 fleet renewal, focus turning to wide body fleet roll-over

1. Forecast total B738 fleet units as at 31 December 2011 2. Includes transfers from Jetstar and Qantas International 3. A330-200 compared with B767-300, B737-800 compared to B737-400. Unit cost improvement and fuel savings are approximate.

BENEFITS OF FLEET RENEWAL

• Yield improvement
• Cost reduction
• Operational efficiency
• Environmental credentials

REDUCTION IN UNIT COST3 NARROW-BODY AIRCRAFT

• B738 fleet renewal is almost complete

2005 20111 2016 2021 B737-800 27 55 c70 c100 B737-400 21 14

• B737-300

11

• B737 Total

59 69 c70 c100

WIDE-BODY AIRCRAFT

• Existing Jetstar A330 aircraft to replace B767

2005 2011 20162 2021 B767 24 23

• A330

4 4 c28 c28

~5% ~7.5%

A330-200 B737-800

46

Qantas Frequent Flyer

Simon Hickey

Chief Executive Officer Qantas Frequent Flyer

47

Provide focus

• n business

value Position business for growth Create hero brand Increase member engagement Leverage assets to grow along the value chain into new markets and create new revenue streams Establish infrastructure and implement strategies along the value chain

Segmentation Relaunch Direct Earn Create Coalition Coalition Expansion

Why are we in the Loyalty business? To enhance member engagement and shareholder value

Segmented Member Strategies Grow along the Loyalty Value Chain

WE ARE HERE

COMPLETE IN PROGRESS COMPLETE COMPLETE COMPLETE COMPLETE 48

AIM:

Qantas Frequent Flyer: Where are we today?

• Australia’s largest and most engaging loyalty

program

• 8 million+ members – more than 50%

household penetration

• Broadest selection of earn partners
• Unrivalled partner network, redemption
• ptions and Qantas assets
• Program design creates considerable

strategic advantages for Qantas

Vii Loyalty

• Largest loyalty operator in Australia –
• perates over 100 loyalty programs
• Scalable marketing and analytics platform
• Significant opportunity exists to leverage IP in

adjacent industries and new geographies — Online Retail (epiQure by Qantas Frequent Flyer, Wishlist) — Data Analytics & Marketing — Operate third party loyalty programs

COALITION LOYALTY PROGRAM RELATED BUSINESSES

Driving Growth in the Core Innovate and Expand along the Loyalty Value Chain

49

World leading partner profile

BEHAVIOURAL OUTCOMES

Customer acquisition Improved retention Increased share of wallet Improved margin

Valued member proposition The coalition engagement model

• Simple
• Achievable
• Desirable
• Reach
• Breadth
• Brands
• Innovation and technology
• Communication channels
• Leverage assets
• Community

50

Qantas Frequent Flyer: 5 Year Vision and Strategy

Superior member experience and engagement World leading partner network Operational excellence Market leading insights and communication channels

BUILDING THE WORLD’S BEST LOYALTY BUSINESS

Passionate teams, highly engaged Safety is always our first priority Innovate and expand along the loyalty value chain

51

PILLARS KEY MEASURES

Maintain superior member experience and engagement

• 10 million QFF members
• Industry leading NPS1

Leverage market leading insights and communication channels

• Multiple segmentation and engagement initiatives

in place

• Market leading multi-channel communications
• ptimisation

Maintain and extend the world leading partner network

• Partners in all areas of major consumer spend

Set the benchmark for operational excellence

• End-to-end loyalty infrastructure in place
• EBIT 5-10% CAGR over 5 years
• Maintain breakage below 10%

Innovate and expand along the loyalty value chain

• Operate 3+ other Loyalty programs in new

geographic markets

KPIs: What does success look like?

Continue to exceed cost of capital and grow returns

• 1. Net Promoter Score

52

• Deepest consumer knowledge in the market
• Significant Qantas program enhancements launched based on behavioural

insights

‒ Improved tier and cabin benefits to encourage and reward positive airline behaviour ‒ New level of recognition for our most frequent flyers – “Platinum One” ‒ Improved upgrade experience ‒ Improved access to classic award seats and upgrades

• Jetstar earn options expanded leveraging customer insights
• Extend the superior in-flight experience and leverage Qantas Group assets e.g.

“epiQure by Qantas Frequent Flyer”

• Engagement tools via social media and device apps

We continue to drive deeper engagement with Frequent Flyers

53

• Over 500 partners to earn points
• 1,000+ destinations to fly to using points
• 2,500 products to redeem in the QFF store
• Qantas and over 30 partner airlines and

their affiliates

• 1,000 destinations
• 500+ lounges with award winning Melbourne

& Sydney Marc Newson First lounges being extended offshore to LAX, SIN, HKG

We maintain superior member experience and engagement…

A better program, experience and business

COMPETITIVE ADVANTAGES

More ways to earn and redeem points More destinations/better network

• Over 4m awards were redeemed last year
• Members use their points for 3.8m flight seats

and 0.5m store products in FY11

• More Classic inventory
• QFF spent $660m in rewards last year

More rewarding

• Australia’s best recognition program
• Continual innovation to lift the bar (eg.

Platinum One, upgrade overhaul)

• Intent: delivery of consistently extraordinary

experience

Better customer experience, with enhanced levels of recognition the more you fly

54

Segmented strategies driving personalised engagement

… by leveraging market leading insights and communication channels

Innovation around earning and redeeming options online Multi channel strategy for engagement Deepest consumer knowledge in the market

• PlatinumOne
• Auto rewards
• epiQure by Qantas Frequent Flyer
• Mobility
• Apps designed to drive deeper engagement
• Social media

55

We continue to extend our world leading partner network…

SELECTION OF EXISTING PARTNERS NEW/EXCLUSIVE PARTNERS

Due in 2012: Malaysia Airlines Kingfisher Air Berlin

56

• Program design
• Execution of direct marketing
• Customer insights
• Member management

...and work to complete our end-to-end loyalty infrastructure to drive operational excellence

STRATEGY AND PROGRAMME MANAGEMENT

Program Design Customer Insights Rewards Sourcing & Fulfilment Direct Marketing Call Centre Points Engine Partner Management

COMPONENTS OF QUALITY CONSUMER LOYALTY SOLUTIONS NEW CAPABILITIES

POS Data Capture Tools Online Customer Interface & Retail Expertise

The combination of QFF and Wishlist extends our capabilities

• Investing in Oracle operating platform
• New scalable and flexible platforms

acquired through Wishlist

• Investing in a new ERP system

Operational expertise across end-to-end loyalty business Continue to invest in improving our loyalty infrastructure to drive operational excellence

57

EXPERIENCE: Operating over 100 loyalty programs

We are now structured for growth in new markets

Both Domestic and International opportunities exist

Wishlist acquisition: a strategic enabler broadening our loyalty service offerings

CAPABILITY: Proven capability in multiple loyalty program solutions and in online

• Online retail
• Analytics and marketing services
• Retail & Coalition loyalty business process outsourcing
• Award Store provision

OPPORTUNITIES

+

58

59

Jetstar Domestic

Bruce Buchanan Group Chief Executive Officer Jetstar

Jetstar Domestic: Where are we today?

• Australia’s 3rd largest airline
• Low cost carrier focused on price sensitive leisure

travellers

• 52 million passengers carried domestically

since 2004 launch

• Operates ~1,600 flights/week carrying 10m

passengers annually

• 36 A320/A321s service 19 destinations
• Industry leading ancillary revenue
• Based in Melbourne

ASK GROWTH (bn)

Note: Aircraft as of Q4 2011

0.4 6.0 8.0 9.9 10.8 11.2 11.6 14.3 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11

+68%

60

Jetstar Domestic: Business Model and Strategy THE CLEAR CHOICE FOR PRICE SENSITIVE TRAVELLERS

Lowest cost through

• perational

excellence and innovation World-leading ancillary revenue Strong brand with high customer engagement Commitment to low fares leadership

Safety is always our first priority Passionate teams, highly engaged

61

KPIs: What does success look like?

• 1. Cost per ASK 2. Total Recordable Injury Frequency Rate 3. Lost Work Case Frequency Rate 4. Net Promoter Score

Continue to exceed cost of capital

PILLARS KEY MEASURES

Lowest cost through operational excellence and innovation

• Lowest Domestic CASK1
• Leading aircraft utilisation
• Benchmark TRIFR2 and LWCFR3

Commitment to low fares leadership

• Leadership in ‘Price Competitiveness Index’

World-leading ancillary revenue

• Industry leading ancillary revenue per

passenger Strong brand with high customer engagement

• Leading NPS4 for LCC
• Superior employee engagement
• Continued innovation and brand extensions

62

We will continue to be the lowest cost airline in the domestic market…

• 1. Gross unit cost excluding fuel

63

1

… and will break new ground through our innovative culture and cutting edge technology

JETSTAR MASTERCARD IMPROVED QFF PROPOSITION NEW PRODUCTS E.G. IPAD SMS BOARDING PASSES CALL CENTRE CHAT, SKYPE INTEGRATION NEW PAYMENT METHODS

64

Unwavering commitment to being the low fares leader for price-sensitive travellers…

65

…and ongoing market leadership in ancillary revenues

13 15 16 19 28

10 20 30

AirAsia RyanAir Tiger EasyJet Jetstar

AVERAGE ANCILLARY REVENUE/PAX (AUD)

Source: Jetstar Oct 2011 YTD $/pax includes bag fees sold as bundle in JetSaver and JetFlex fares until May 2011, bag fees all sold separately after May 2011; EasyJet full year results year ended 30 Sep 2011; Tiger full year results year ended 31 Mar 2011; AirAsia Malaysia Q3 FY11 results; Ryanair half year results ended 30 Sep 2011

66

Further leverage Jetstar’s brand strength through new and traditional mediums

• Website
• Social Media
• Press
• Outdoor ads
• TV
• JetMail
• Credit Cards

67

68

Growing our Portfolio of Related Business

LOGISTICS ONLINE RETAIL

Operate other Loyalty Programs Analytics Travel Distribution

Leveraging core assets to drive growth of portfolio businesses

Operate other Loyalty Programs Analytics Travel Distribution

OPERATE OTHER LOYALTY PROGRAMS ANALYTICS TRAVEL DISTRIBUTION

69

Freight

Rob Gurney Group Executive Qantas Airlines Commercial Growing our Portfolio of Related Businesses

70

Qantas Freight: Where are we today?

Freighters

• 3 x B747-400F (Atlas Air)
• 1 x B767-300F (EFA)

Freight Terminals

• Sydney, Melbourne,

Brisbane and Perth

• Los Angeles

Belly Space

• Qantas international

passenger flights

• Jetstar International
• Jetstar Asia

Jets Transport Express

• Specialist road feeder services

to the air freight industry

• Over 30 prime movers

Express Freighters Australia

• Freighter Aircraft Operator
• 4x B737F wet leased to AaE1
• 1x B767-300F wet leased

to QFE 2

Australian air Express

• Domestic air linehaul
• Cargo terminal operations
• Markets Qantas domestic

belly space network

Star Track Express

• Distribution of high value

express/time sensitive cargo

• B2B market offering end

to end service

Qantas Courier

• Specialist courier services to small

and medium size enterprises and individuals

• Unaccompanied baggage services

NETWORK SUBSIDIARIES JOINT VENTURES

• 1. Australian air Express 2. Qantas Freight Enterprises

71

Qantas Freight: 5 Year Vision and Strategy EXCELLENCE IN FREIGHT SERVICES

Leverage integrated freight network & relationships Capitalise

• n growth
• pportunities

in Asia Pacific Lowest cost and best service through

• perational

excellence Market leading customer offering

Safety is always our first priority Passionate teams, highly engaged

72

KPIs: What does success look like?

• 1. Revenue Freight Tonnage Kilometres 2. Total Recordable Injury Frequency Rate 3. Lost Work Case Frequency Rate

Continue to exceed cost of capital

PILLARS KEY MEASURES

Leverage integrated freight network and relationships

• Qantas Freight to market all Qantas Group

freight capacity

• Maintain and build key corporate accounts

Market leading customer offering

• Leading Customer Satisfaction Survey result

Capitalise on growth opportunities in Asia Pacific

• Increased market share of air freight services

in region Lowest cost and best service through operational excellence

• Leading Cost per RFTK1
• Leading freighter availability and utilisation
• Leading TRIFR2 and LWCFR3
• Superior employee engagement

73

Market leading domestic joint ventures

Australian air Express - wholesale domestic line haul and cargo terminal operations Star Track Express - retail focused air and road express Reconfigure Joint Ventures to leverage strengths of two leading express freight brands

74

Leverage regional growth opportunities via the Group’s network expansion in Asia

COMPETITIVELY POSITIONED WITH ACCESS TO GROUP ASSETS

• Qantas belly space
• Jetstar belly space
• Jetstar Asia belly space
• Atlas Freighters
• Express Freighters Australia

GROWTH IN ASIA

• Leverage established position in China
• Utilise attractive freight traffic rights
• Continue to respond to evolving

market dynamics e.g. shifting manufacturing trends to western China

75

Session 1: Q&A

76

Transforming Qantas International

Lyell Strambi Group Executive Qantas Airlines Operations

77

Qantas International: Where are we today?

Note: Graph not to scale

Short Term Long Term UNDERLYING EBIT TIME

• Qantas International business is important to the Qantas Group

̶

Enhances Group’s strong domestic business

̶

Provides important business network solution for corporate customers

̶

Supports margin premium

̶

Integral to loyalty offering

• However given the significant capital employed, current operational and

financial performance is unsustainable

78

The business needs transformation

STRUCTURALLY CHALLENGED

• Extremely high levels of competition

̶

Rise of Middle Eastern carriers

̶

Government sponsored competitors

• QAI - Asian network and schedule disadvantage
• QAI - Cost disadvantage
• Inconsistent product offering

STRUCTURALLY SOUND

• Comparable cost base to competitors
• Competitive product offering
• No network or schedule disadvantage
• Strong partnership and alliance network

79 Japan Europe Africa N America S America China Aus SE Asia NE Asia

Pillar 2

THE CLEAR CHOICE FOR PREMIUM LONG HAUL TRAVEL

Strengthen Asia

Strong multi-brand model Safety is always our first priority

Strengthen Network

Passionate teams, highly engaged

Superior customer experience Underlying business transformation

Qantas International: 5 Year Vision and Strategy

80

KPIs: What does success look like?

PILLARS KEY MEASURES Superior customer experience

• Leading International NPS
• Superior employee engagement

Underlying business transformation

• Improvement in unit cost
• Leading International aircraft availability and OTP1
• Industry leading TRIFR2 and LWCFR3

Strengthen network

• Greater network frequency on key business and

premium leisure routes

• Greater number of ATI4 partnerships

Strengthen Asia

• Greater share of Australia – Asia Corporate market

IMPROVE RETURNS ON CAPITAL (QANTAS AIRLINES5 SEGMENT TO SUSTAINABLY EXCEED COST OF CAPITAL IN LONG TERM)

• 1. On Time Performance 2. Total Recordable Injury Frequency Rate 3. Lost Work Case Frequency Rate 4. Anti- Trust Immunity
• 5. As defined in the 2011 Annual Report Note 2 (page 62). Qantas represents the Qantas passenger flying businesses and related businesses, and excludes Jetstar, Qantas Freight and Qantas Frequent Flyer. 81

Clear financial objectives have been defined

OBJECTIVES RETURN QANTAS INTERNATIONAL TO PROFITABILITY SUSTAINABLY EXCEED COST OF CAPITAL FOR QANTAS AIRLINE SEGMENT1 SHORT TERM LONG TERM MILESTONES

• Reduce losses of Qantas International

business then improve profitability

• Rationalise and restructure unprofitable

capital, selectively invest in transformational opportunities

• Profitably grow earnings of International

business

• Consider capital reinvestment, pursue

growth opportunities

BUILDING LONG TERM SHAREHOLDER VALUE

1.As defined in the 2011 Annual Report Note 2 (page 62). Qantas represents the Qantas passenger flying businesses and related businesses, and excludes Jetstar, Qantas Freight and Qantas Frequent Flyer.

82

Delivering consistently exceptional customer experiences is critical to our success

FLEET MODERNISATION GROUND PRODUCT MODERNISATION SERVICE CULTURE PROGRAM

83

$m

$0 $250 $500 $750 2004 2005 2006 2007 2008 2009 2010 2011 2012

Dedicated efficiency and cost transformation programs will accelerate, closing the cost base gap

NEXT PHASE OF TRANSFORMATION INITIATIVES WILL BE MORE COMPLEX, BUT WILL DELIVER GREATER BENEFITS

Target

84

QUAD ENGINE AIRCRAFT

2005 20111 2013 2016 B747 30 26 15 9 A380

• 12

14 14

Quad Engine Aircraft with A380 Product

0% 40% 80% 100%

Fleet transformation: Efficiency, superior margin premium, enhanced customer experience

~80% OF QUAD ENGINE AIRCRAFT - AWARD WINNING A380 PRODUCT BY MID 2013

• 1. As at 31 December 2011
• Unit cost advantage:

̶

A380 v B747 ~8%

̶

B787-9 v B763 ~15%

• Reconfiguration of A380s & 9 x B747s has commenced, increasing revenue production
• Prudent capital allocation – deferred 6 x A380s, B787-9s allocated based on return measures

85

Hub transformation: Airport terminal consolidation project

BENEFITS OPERATIONAL EFFICIENCIES REVENUE

Reduction in Minimum Connection Times (MCT) and new revenue

• pportunities

OTHER BENEFITS

Underpins Sydney as Qantas’ main hub, supports the international network alliance strategy, long term price and infrastructure surety

CUSTOMER

Increased product differentiation and seamless end-to-end customer experience

86

Business model transformation Industrial Relations environment stabilised with key work groups Modernising our business practices Engaging our people in the change agenda

87

A clearly superior international network

• Optimising the existing Qantas network
• Using alliances to bolster and expand reach
• Asia - supplementing the network to grow with our customers

88

We will continue to build on our extensive global network - leveraging key partnerships

MAXIMISING

• neworld

BENEFITS STRENGTHENING EXISTING PARTNERSHIPS CREATING NEW ALLIANCES

NEW ALLIANCES Extended network reach Improved customer

• ffering

Greater QFF earn/burn

• pportunities

Lower invested capital

89

We are deepening and broadening alliances

AND THERE IS MORE TO COME…

• Qantas A380 services from Australia to London, connecting through Singapore as a

premium hub to Europe

• Bangkok and Hong Kong to London will leverage partner network adjacency
• Qantas to retain ownership of slots at Heathrow and lease to BA
• Commencing early 2012
• Replace Buenos Aires with three-weekly service to Santiago

̶ Larger, more premium market ̶ Better and more frequent connections with LAN to other South American destinations

• Commencing early 2012
• Granted full anti-trust immunity clearance for Joint Business Agreement
• Active coordination of flight schedules and pricing
• Improved scheduling and connectivity the initial focus, but could open up other

possibilities over time

• Commencing early 2012

90

Airline partnership evolution curve

• Network Extension
• Distribution Reach
• Through Check
• Virtual Network &

Connectivity

• Leverage QF Brand
• FF Proposition
• Enhanced Distribution
• Deep Commercial

Collaboration

• Enhanced Customer

Proposition

• Network Growth
• Profit / Revenue Share
• Operational Efficiencies
• Combined Distribution
• Market Entry
• Portfolio Growth
• Risk Sharing

Depth of Integration Relationship Maturity

CODESHARE JOINT BUSINESS AGREEMENTS (JBA)

NOTE: REQUIRES ANTI TRUST IMMUNITY

INTERLINE EQUITY PARTNERSHIPS 1 2 3

148 Interline Agreements

• 62 with favourable seat access and rates (SPA)

Bilateral JBA (Profit/Revenue Share) e.g. QF / BA (JSA), AA / QF Multilateral JBA e.g. AA-BA-IB Transatlantic JBA

4

26 bilateral codeshare partners

• 18 “Freesale” arrangements
• 8 “Block Space” arrangements (Risk Sharing)

Commercial Value

91

Strengthening our position in Asia is critical

OPPORTUNITY ASSESSMENT FRAMEWORK

• Pathway to achieve objectives
• Attractive risk / return profile
• Prudent allocation of capital
• Leverage existing Group assets where

appropriate e.g. relationships, infrastructure, presence, experience

OBJECTIVES

• Service the growing portfolio of customers who

are increasingly focused on Asia

̶

Includes existing Australian corporate customers and new Asian customers

• Operate a competitive Asian hub

̶

Appropriate network, destinations, frequencies and operational infrastructure

• Rebuild market share to / from Asia

RATIONALE

• Qantas International is an end-of-the-line

carrier

̶ Destination and frequency disadvantage ̶ Market share has declined from 39% to 14%

• ver last decade
• An Asian hub is required to be competitive

̶

Fastest growing aviation market in the world

̶

Increasingly vital market to our corporate customers

92

Qantas International: Progress against strategic objectives to date Initial phase of transformation plan announced August 2011

PILLARS PROGRESS ACHIEVEMENTS TO DATE

Superior Customer Experience

• Implemented international Faster, Smarter Check-in at key trans-Tasman ports
• Extended A380 network to HKG
• Commenced reconfiguration of 9 x B747 aircraft with award winning A380 product
• Commenced upgrades to premium lounges in LAX, SIN, HKG

Underlying Business Transformation

• Industrial Relations environment stabilised
• Reduced capital expenditure in business via deferral of 6 x A380 aircraft
• Further optimised network - DFW in lieu of SFO; Santiago in lieu of Buenos Aires
• Continued transformation of cost base via QFuture

Strengthen Network

• Granted full ATI clearance for Joint Business Agreement with American Airlines
• Restructured and strengthened Joint Service Agreement with British Airways,

reduced exposure to Europe

• Sponsorship of Malaysia Airlines into oneworld

Strengthen Asia

• Evaluating various options with key stakeholders relating to new Asian premium

airline

work in progress

93

94

Jetstar: Growing in Asia

Bruce Buchanan Group Chief Executive Officer Jetstar

95

Asia Pacific – significant growth forecast for target market

GLOBAL MIDDLE CLASS IN 2009 AND PREDICTION IN 2030

Source: IATA, data taken from OECD, Standard Chartered Research

• Asia Pacific LCC sector growing at 33% CAGR, but

still under penetrated

• LCC profit pool to grow to A$13bn by 2020

LCC GROWTH RATE 2001-2011

5%

UK Asia Pacific US

5%

Asia Pacific is the largest and fastest growing region in the world aviation market

Source: CAPA Centre for Aviation

5 10 15 20 25 30 35 40 45 50

% total seat capacity provided by LCCs 2008 2004 2006 2010 2002 UK (domestic) 2007 2011 Australia (domestic) 2009 Global US (domestic) Asia Pacific European Union 2003 2005 2001

MAJOR GROWTH OPPORTUNITY FOR LCCS IN ASIA PACIFIC:

LCC SHARE OF TOTAL CAPACITY BY REGION/COUNTRY

33%

96

BUSINESS LAUNCH BASED AIRCRAFT3

Jetstar Australia 2004 36- A320s Jetstar Asia 2004 16- A320s & 3- A330s Jetstar International 2006 8- A330s Jetstar Pacific 2007 5- B737s & 2- A320s Jetstar NZ 2009 8- A320s Jetstar Japan 2012 3- A320s (at launch)

Jetstar in Asia: Where are we today?

1 6 2 3 4 5 20 39 59 75 82 95 97 112

+28% CAGR

FY11 FY10 FY09 FY08 FY07 FY06 FY05 FY04

• Jetstar is one of the fastest growing airlines in the Asia Pacific region

‒ Operations based across two continents and four countries ‒ Servicing 17 countries, 57 destinations ‒ Combined operating fleet of 78 aircraft1 ‒ 3,000 flights per week and growing

• Jetstar brand embedded in Asia

‒ Significant growth into China – servicing 10 ports, with further growth opportunities ‒ Launch of long-haul A330 base in Singapore

• Jetstar Asia strong profits and growing

‒ Normalised PBT2 of SGD18m with 46% capacity growth

JETSTAR’S GROWING ROUTE NETWORK

• 1. Including Jetstar Pacific aircraft 2. FY11 figure adjusted for SGD10m of long-haul start-up costs but including other start-up costs from organic growth
• f narrow body operations 3. Fleet numbers as of 30 June 2011

97

98

Jetstar in Asia: Business Model and Strategy THE LEADING LOW COST CARRIER IN ASIA

Lowest cost in every market we serve World-leading ancillary revenue Strong brand with high customer engagement Operational excellence and innovation

Safety is always our first priority Manage global and local priorities through a franchise operating model Passionate teams, highly engaged

KPIs: What does success look like?

• 1. Total Recordable Injury Frequency Rate 2. Lost Work Case Frequency Rate 3. Net Promoter Score

Improve returns on capital to sustainably exceed cost of capital

PILLARS KEY MEASURES

Lowest cost in every market we serve

• Lowest CASK in each region

Operational excellence and innovation

• Leading international aircraft utilisation
• Benchmark TRIFR1 and LWCFR2

World-leading ancillary revenue

• Industry leading ancillary revenue per

passenger Strong brand with high customer engagement

• Leading NPS3 for LCC in each region
• Superior employee engagement

99

Jetstar sources of competitive advantage

Jetstar Group scale Consistent customer experience Integrated Pan Asian network Consistently low fares Can do culture Operational efficiency Highly recognised brand World class ancillary revenues

Competitive Advantage

100

Expanding Jetstar’s footprint in Asia: Leverage capital-efficient franchise operating model

Southeast Asia Greater China Japan South Asia

Considered and prudent approach to growth and expansion

China: growing presence in global economy

• Linking China to Asia via

international connectivity

• 10 destinations in Greater

China South Asia: likely to become an important market in the future

• Monitoring closely

Japan: strengthening LCC competitive environment

• Set to launch Jetstar

Japan in 2012

• Links to North Eastern

Chinese ports Southeast Asia: evolved LCC market with strong competition

• Expanding presence and

profitability

• Turnaround Jetstar Pacific

Current major Jetstar brand presence

101

Franchise model underpins scalable growth

NEW OPPORTUNITIES JAPAN PACIFIC (VIETNAM) ASIA (SINGAPORE) INTERNATIONAL AUSTRALIA & NEW ZEALAND (DOMESTIC)

QF joint capacity & network management

Brand, Revenue Generation, Scale

102

Further building on Jetstar’s strong brand which already resonates at a local level

103

Growing Jetstar in Japan

• Japanese domestic market

‒

World’s 10th largest population: 127 million people

‒

Four of the world’s top ten routes by seats

‒

Large market with low LCC penetration

‒

Dominated by ANA (54%) & JAL Group (34%)

‒

Significant opportunity to stimulate demand with low fares

• Jetstar Japan

‒

Jetstar Japan to launch in 2012

‒

JAL & Mitsubishi strong local partners

‒

First true LCC covering entire Japanese market

‒

Leverages strong Jetstar brand position

‒

Grow to 24 aircraft1 in first few years

‒

Focus on domestic and international leisure destinations

Reinforcing Jetstar as the largest LCC in Asia Pacific2

• 1. Off balance sheet for Qantas Group 2. Based on gross revenues

104

Critical success factors in place for Japan

True cost leadership

• Proven experience operating LCCs in high labour cost markets
• Leveraging Jetstar Group supply and service contracts

Dual-brand strategy with Japan Airlines

• Anti-trust immunity granted by Japanese Fair Trade Authority
• Only LCC with experience of interlining and codesharing with Full Service Carrier
• Access to constrained infrastructure and coordination of capacity with JAL

Brand awareness and distribution networks in Japan

• Well established brand
• Highest LCC recognition
• Top 100 brand
• Value of connectivity and network reach of Jetstar, Jetstar Asia, Qantas and JAL

105

106

Session 2: Q&A

Group: Fleet Strategy

Gareth Evans Chief Financial Officer

107

CUSTOMER SATISFACTION ENVIRONMENTAL CREDENTIALS IMPROVING YIELDS OPERATIONAL EFFICIENCY COST REDUCTIONS

Virtuous cycle of fleet investment builds long term shareholder value

108

Improved operational efficiency driven by fleet simplification…

2021 - 5 Fleet Types 2011 - 7 Fleet Types

A380 B747 A330

INTERNATIONAL

B767 B737-400 B737-800

DOMESTIC

A320 A330

JETSTAR

A380

INTERNATIONAL

A330 B737-800

DOMESTIC

A320 B787

JETSTAR

Additional B787

Allocation TBD - based on return measures 109

Note: excludes Regionals

… combined with a modern, sustainable fleet

• Jetstar 4.3 years versus average Low Cost Carrier 5.0 years

1

• Qantas Airlines 9.6 years versus average Full Service Carriers 10.5 years

1

Qantas Group: Current Average Fleet Age

8.3 years

Qantas Group: Target Average Fleet Age

8 – 10 years

• 1. Average fleet age based on comparative sample data included in graph

Source: Company reports, data taken from last reported period where available as at May 2011 data. Qantas data as at Q3 2011

110

4.3 8.3 9.6

3 6 9 12 15 Tiger Airways Tiger Airways Australia Ryanair Easyjet Air Asia Jetstar Airways Virgin Blue Emirates Singapore Airlines Qantas Group Qantas Airlines Air New Zealand JAL Japan Airlines Cathay Pacific British Airways Lufthansa United Airlines American Airlines Southwest Airlines Delta Airlines

YEARS

Fleet renewal drives superior economics

• 1. A380 compared with B744, A320neo compared to A320 (no sharklets) and B787 compared to B763. Unit cost improvement and fuel savings are approximate.

35.0 35.5 36.0 36.5 37.0 37.5 38.0 38.5 39.0 FY06 FY07 FY08 FY09 FY10 FY11 '000 Litres per ASK

Delivery of first 3 A380s

AVIATION FUEL CONSUMPTION

A380 A320neo B787

~ 10% ~ 15% ~ 20% REDUCTION IN FUEL CONSUMPTION 1 REDUCTION IN UNIT COST 1 ~8% ~15% ~8%

A380 A320neo B787-9

111

Disciplined investment in growth markets

112

BUILDING ON OUR STRONG DOMESTIC BUSINESS INTERNATIONAL OPERATIONS GROW JETSTAR IN ASIA

EXISTING NEW VENTURES

FLEET PROFILE – EXISTING1 & GROWTH

QANTAS JETSTAR

153 58 38 23 16

up to 11

• wned aircraft

24 x A320 (3 at launch)

Jetstar Asia Jetstar Pacific New Premium Carrier

24

• ff balance sheet

42% economic interest

Jetstar Japan

7

• ff balance sheet

27% economic interest

–

• No. of

Aircraft

• 1. Forecast existing passenger Fleet as at 31 December 2011 (excludes 5 x Freighter aircraft) 2. Includes 9 x Network Aviation aircraft

2

alternative model

OR

Jetstar International

Flexible fleet plan prepared for all market demand scenarios

Time Capacity FLEX UP FLEX DOWN

• Fleet is the major component of asset base

and invested capital

• Group’s fleet plan includes significant

flexibility to scale up or down to meet market demand

‒

Contractual cancellation rights

‒

Up to 95 narrow-body aircraft and 25 wide-body aircraft lease renewals over next 10 years with 43 over the next 3 years

‒

Aircraft delivery reschedule rights

‒

Up to 50 aircraft retirements over the next 5 years

‒

Purchase options and purchase rights

113

Group: Funding Strategy

Gareth Evans Chief Financial Officer

114

Qantas is one of the only airlines with an Investment Grade Credit Rating (IGCR)

IMPROVED LIQUIDITY IMPROVED ACCESS TO DEBT REDUCED COST OF DEBT IMPROVED DEBT TERMS

INVESTMENT GRADE CREDIT RATING

• Competitive advantage over peers, particularly in more difficult funding markets
• Enables investment in fleet renewal and new product
• Supports profitable growth

115

Status of funding markets

• European uncertainty is impacting availability of bank debt

‒ Banks focusing on companies with stronger credit profiles

• Qantas bank funding historically sourced from a diverse range of local and
• ffshore institutions
• Qantas retains access to a broad geographic spread of debt funding sources
• ECA1 rules have recently changed to align pricing and terms to airline credit

quality

‒ Limited impact on Qantas Group given our strong credit rating and range of alternate funding sources available

• Capital markets products remain open to Qantas

‒ e.g public bond markets, EETC-type structures, ECA1 and ExIm Bonds

• Australia is an attractive jurisdiction for lenders

‒ Well developed legal environment ‒ Access to assets ‒ Upcoming Personal Property Security Act

• 1. Export Credit Agencies

116

Strong balance sheet with robust framework for capital management

• Cash reserves exceeding $3.3bn plus $300m Standby Debt Facility1
• $845m unsecured syndicated loan tranches maturing in April 2014 and April 2015
• Mandated funding in place for FY12 aircraft deliveries including 2 x A380, 10 x B737-800

and 3 x Q400

• Qantas manages its balance sheet to protect its IGCR

– Increased unencumbered narrow body aircraft by 16 in the past 2 years – Retained significant flexibility in the fleet plan

• Continue to leverage balance sheet strength to fund upcoming deliveries with a mix of

cash, structured leases, bank and ECA funding

• No financial covenants in any financing facilities
• The Group will continue to actively manage capital to support measured growth, manage

the business in uncertain times, maintain an Investment Grade Credit Rating and target appropriate returns for shareholders

• 1. Undrawn

117

Summary

Alan Joyce Chief Executive Officer

118

Building on our strong domestic business

Qantas Group: 5 Year Measures of Success

• Add incremental value to the Group
• Individual businesses achieve ROIC > WACC
• Minimal capital requirements
• Maintain profit-maximising 65% market share
• NPS: QA - relative NPS differential > 10%;

JQ leading LCC NPS

• QA: 90% OTP2
• Improvement in unit cost
• Top 2 LCC in Asia Pacific Region (by revenue)
• Lowest CASK for each Jetstar branded airline
• All new ventures profitable within 3 years
• 10 million QFF members
• Partners in all areas of major consumer spend
• 5-10% EBIT CAGR FY12-FY17
• Maintain breakage below 10%

PILLARS METRICS CURRENT RETURNS

• Short term: return business to profit
• Relative NPS differential > 10%
• 85% OTP
• Improvement in unit cost

TARGET RETURNS

Growing Jetstar in Asia Transforming Qantas International Profitably building

• n 65% market

share through dual brands Deepening FFP member and partner engagement Growing our portfolio of related businesses Continue to strongly exceed cost of capital1

• World leading safety culture
• 80+% of total workforce “engaged”

ROIC > WACC ROIC > WACC ROIC > WACC ROIC < WACC ROIC ~ WACC ROIC > WACC

Continue to exceed cost of capital and grow returns Continue to exceed cost

• f capital

Improve return

• n capital1

Improve return

• n capital

ROIC > WACC ROIC > WACC ROIC ~ WACC ROIC > WACC

Deliver sustainable and attractive returns to shareholders

• 1. Long term financial objective for Qantas

Airlines segment is to sustainably exceed the cost

• f capital on a combined basis

119

• 2. On Time Performance

Summary

• Group of businesses with significant value

‒ Majority of businesses are strong – evolving, building and growing ‒ One underperforming business – transforming Qantas International ‒ New opportunities leveraging existing operations – growing Jetstar in Asia

• Clear vision and strategic objectives with KPIs in place to measure success
• Significant change management program underway

‒ Management Team has depth of experience to lead change

• Resolute on motivating and enabling our people to deliver excellence
• Strong balance sheet, prudent approach to capital allocation and a flexible

investment profile

FOCUSED ON EXECUTING STRATEGY TO DELIVER SUSTAINABLE RETURNS TO SHAREHOLDERS

120

Q&A

121